Infestation, Dampness, or Settlement
If the appraisal indicates evidence of infestation (such as, wood-boring insects), dampness, or abnormal settlement, the appraisal must comment on the effect on the value and marketability of the subject property. The lender must either provide satisfactory evidence that the condition was corrected or submit a professionally prepared report indicating, based on an inspection of the property, that the condition does not pose any threat of structural damage to the improvements. The appraisal should be made "subject to" repairs or alternations, or “subject to” an inspection by a qualified professional.
For more information, see B4-1.3-06, Property Condition and Quality of Construction of the Improvements.